Lease Prepayment

Maximize the value of your property

What is a prepayment?

The prepayment of a cell tower or roof top lease is when the landlord in a cellular antenna lease sells the future rent stream and/or the entire lease to a third-party in exchange for a lump sum, prepayment of rent. The lump sum prepaid rent allows the landlord to put the money to work in a variety of ways.

Md7’s prepayment programs are different than most of the programs out there.

Most buy-out companies work for Wall Street banks and private investors. Md7 works for your existing tenants – the mobile operators and owners of the cell site and equipment that you have been dealing with for years, even decades. When you sign up for an Md7 prepayment program, you obtain the benefit of access to capital while granting the tenant the peace-of-mind necessary to make long-term network management decisions related to the cell site.

Benefits

Cash up Front

Receive your money now and invest or spend it.

Minimize Risk

Most leases have termination rights. Your current rent is not guaranteed.

If the lease is ever canceled, you keep the money.

Potential Tax Advantages

1031 Tax Deferred Exchange

529 Tax Savings Plan for College Tuition

Capital Gains Tax

Net Operating Loss Carryforward or Carryback

(check with your tax advisor)

Lease Prepayment FAQs

What is my lease worth?

The purchase price is typically dependent upon the following factors:

Name of carrier on the property

Amount of rent received

Escalation rate of rent

Location of cell tower or roof top

Length of term of prepayment

Existence of mortgage and ability to obtain an SNDA from the lender

If the lease can be terminated, why are Md7 and its financing partners interested in purchasing it?

Simply put… portfolio management. Individual site owners are exposed because if their site is terminated there is likely nothing they can do to replace it. Md7 and its financing partners are purchasing thousands of sites. If one site gets terminated, they are able to offset the losses against the rest of the portfolio with few adjustments.

What if I don’t need the money?

GREAT! We typically don’t do business with site owners that “need” the money. It’s great to have an immediate “use of funds”, but other site owners who are well versed in best business practices understand the value of controlling their financial future and find ways to invest in guaranteed returns by taking a lump sum as opposed to holding onto a terminable lease with little guarantee.

What happens if the carrier terminates the lease after I sell it?

Nothing! You keep your money. This is a non-recourse transaction, which simply means you keep your money and the investor loses (although it may have a window of time to try and place another carrier at the site).

Will this prevent me from selling my property?

You can sell your property whenever you want. You keep the money from the transaction, and you sell the property for its “current use.” People buy property for the “current use” of the property, not because it has a cell tower on it.

Can the buy-out be structured over multiple tax years?

Yes. In fact, these “multi-pay” deals typically result in a bigger payout to the landlord. Payments to you will be guaranteed by a promissory note.

Can I do a 1031 Tax Deferred Exchange?

Consult your tax advisor.

You may be eligible to invest 100% of the sale proceeds and defer your obligation to pay taxes. Put the full amount of your money to work!

This strategy allows you to “defer” paying the capital gains taxes on the investment property that is sold so long as another “like-kind property” is purchased with the proceeds.

There are four types of 1031 Tax Deferred Exchanges:

Simultaneous 1031 Exchange

Delayed 1031 Exchange

Reverse 1031 Exchange

Construction 1031 Exchange

Am I even allowed to sell you my lease?

Some contracts contain language that gives a tenant a “Right of First Refusal” to consent to the purchase of its lease. Because Md7’s program is driven by the tenant, this consent will not be a concern. Our prepayment program provides a win-win situation for the carrier because they are teaming up with an approved contractor to purchase their sites.

How do I get started?

Md7 will evaluate the parameters of your lease and perform an audit to determine the value of your lease. A member of our capital team will work with you to deliver an option for your consideration and explain the closing process.

What documents and information will I need to provide?

To determine the most accurate pricing, you will be asked to provide the following:

Address of location. We must verify the cell site location and its proximity to nearby sites.

Name of Carrier. The credit worthiness of carrier is vital for maximum payout.

Current Rent (monthly or annual payment)

Current Rate of Escalation (annual vs. term; as well as rate of increase)

Approximate date of next rent escalation

What is the process?

Deliver required information for pricing

Sign the prepayment option agreement

Send in requested closing checklist items for title insurance, etc.

Investor orders title report and conducts site inspection

Provide signature authorization documentation

Money is sent to escrow with a closing / settlement statement

Money is disbursed per escrow instructions

Transaction is recorded in the public record

Find out if a lease prepayment makes sense for you

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"I've been in the field since 2003 and I have to say you rank up there with the best. You have been patient, accommodating, knowledgable and responsive to all of my questions. You walked into quite a mess in our county and I honestly can't imagine getting through all of these projects with any other group."